BTC Fear & Greed Index Falls to 21/100 on FTX Bankruptcy Filing

Key Insights:

• On Friday, bitcoin (BTC) fell by 3.06%. Marking the fifth loss from six sessions, BTC ended the day at $17,047.
• News of FTX.US filing for bankruptcy and early signs of contagion weighed on investor sentiment.
• The Bitcoin Fear & Greed Index fell from 25/100 to 21/100, pressured by the BTC return to sub-$17,000.

On Friday, bitcoin (BTC) fell by 3.06%. Partially reversing a 10.44% rally from Thursday, BTC ended the day at $17,047. Notably, BTC logged the fifth loss from six sessions.

A mixed start to the day saw BTC rise to an early high of $17,671. Coming up short of the First Major Resistance Level (R1) at $18,574, BTC slid to an early afternoon low of $16,355. However, steering clear of the First Major Support Level (S1) at $16,167, BTC found late support to wrap up the day at $17,047.

News of Justin Sun ready to provide billions to FTX to plug the $9.4 billion hole failed to deliver support. Following reports of FTX needing $9.4 billion, news of FTX.US filing for bankruptcy sent BTC and the broader crypto market into the red.

Early signs of contagion added further pressure, with BlockFi the first to announce the suspension of withdrawals and face the heavy hand of state regulators.

Rising bets of a December Fed pivot failed to provide support, with BTC seeing a further decoupling from the NASDAQ Composite Index. The NASDAQ increased by 1.88% to wrap up a bullish week, fueled by Thursday’s US CPI report.

Today, the market focus will remain on FTX, progress toward a bailout, contagion, and updates from the US government and regulators.

The Fear & Greed Index Fell to 21/100 on FTX.US Bankruptcy News

Today, the Fear & Greed Index decreased from 25/100 to 21/100. Despite the news of FTX.US filing for bankruptcy and early signs of contagion, the Index avoided sub-20.

However, the Index sits deep within the Extreme Fear zone, reflecting investor angst over the latest crypto event. Following the LUNA collapse earlier in the year, investor sentiment had improved ahead of the FTX collapse. When considering contagion risks, investor sentiment will likely take time to recover.

Today, the FTX story will remain the key driver. Failure to deliver a bailout would leave contagion and government/regulatory chatter in focus.

The Index would need to avoid sub-20/100 to support a return to 40 and a move into the neutral zone. However, a fall to sub-20/100 would see BTC face the risk of sub-$10,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.48% to $16,966. A mixed start to the day saw BTC rise to an early high of $17,106 before falling to a low of $16.956.

Technical Indicators

BTC needs to move through the $17,024 pivot to target the First Major Resistance Level (R1) at $17,694. A move through $17,500 would signal a bullish session. However, the direction will hinge on updates on FTX and contagion news.

In the case of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $18,340 and resistance at $19,000.

The Third Major Resistance Level (R3) sits at $19,656.

Failure to move through the pivot would leave the First Major Support Level (S1) at $16,378 in play. Barring another extended sell-off, BTC should avoid sub-$15,500. The Second Major Support Level (S2) at $15,708 should limit the downside. However, negative FTX-related news could send BTC to sub-$15,000.

The Third Major Support Level (S3) sits at $14,392.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, bitcoin sat below the 50-day EMA, currently at $18,679. The 50-day EMA slid back from the 200-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals.

A BTC move through R1 ($17,694) would give the bulls a run at R2 ($18,340) and the 50-day EMA ($18,679). However, failure to move through R1 and the 50-day EMA would leave BTC under pressure and bring S1 ($16,378) into view.